At $79/year, Amazon Prime is actually much cheaper than either Netflix or Hulu Plus. But the online retail giant has decided to introduce a more expensive $7.99 monthly fee for its premium service.

Those opting for the new payment structure will receive the same benefits as annual customers, including unlimited streaming of hundreds of movies and TV shows, access to a big slate of Kindle e-book titles, and free two-day shipping on all Amazon-fulfilled products.

This strategy shows that the online retailer is now trying to market Amazon Prime as a direct competitor to Netflix and Hulu Plus. The benefit of receiving free two-day shipping, which is originally what Prime was all about, is becoming more and more of a footnote.

When Prime was first introduced, charging on an annual basis made sense. If it was available for a $7.99 monthly fee, many consumers would probably sign up for November and December and then swiftly cancel their memberships. The whole point of Amazon Prime was to encourage users to shop at Amazon year-round. The story has changed, though, with Prime drawing much more attention these days because of its video streaming and free Kindle book access.

So at a monthly fee of $7.99, Amazon Prime fits in perfectly alongside other premium video streaming platforms. Of course, anyone who has access to a calculator can figure out that the $79 annual rate of an Amazon Prime membership is actually only $6.58 a month, making it the cheapest video streaming service available. Paying annually still makes a lot of sense.

Reader Comments

http://www.facebook.com/hevans1944 Howard Evans

We have Amazon and Netflix subscriptions, including DVD mail delivery from Netflix. One plus feature of Amazon, not available on Netflix, is the ability to rent or (sometimes) purchase videos on demand. Purchased videos are stored “in the Amazon cloud” but we haven’t decided whether this is better than owning a disc or not. Amazon seems to have a better selection than Netflix, but some Netflix videos included in the monthly subscription must be rented at Amazon. You pays your money and takes your choice. We opted for both.